Business Interruption Insurance
What Is Business Interruption Insurance?
Business Interruption (BI) Insurance replaces lost income and costs to continue operating if your business is shut down due to a covered property loss, like fire, vandalism, or smoke damage.
Think of it as a backup plan when you’re physically unable to do business at your location — so you can get up and running seamlessly when your space is ready for operations again.
What Does Business Interruption (BI) Insurance Cover?
Business Interruption (sometimes called Business Income) Insurance is designed to help replace revenue and pay key bills when a covered property loss (like a fire) forces you to pause operations. It typically covers:
- Lost net income you would have earned if the damage hadn’t happened
- Continuing operating expenses (like rent, utilities, taxes, and loan payments)
- Payroll to keep employees on staff (within a certain timeframe and up to a certain amount)
- Extra expenses to reduce downtime (like renting a temporary location or equipment, or paying for rush shipping)
- Lost income and operating expenses when a civil authority or government order blocks access to your premises due to nearby covered damage
- Dependent business income if a key supplier, customer, or leader property (a place that attracts your customers, like an anchor store) suffers covered damage that impacts your business
If something forces your business to close temporarily, there’s usually a short waiting period (about 2–3 days) before your coverage kicks in.
Unless specifically added, this coverage typically doesn’t apply to business closures not caused by physical damage, like a pandemic or power outage.
Business Interruption vs General Liability Insurance: What’s the Difference?
General liability insurance is coverage for when your business harms others (third parties). Business interruption insurance is coverage for you. It helps keep your business running — even when you have to pause for a short time — by covering your lost income and expenses.
| Aspect | General Liability (GL) | Business Interruption (BI) |
|---|---|---|
Designed to protect
|
Your business if you accidentally injure others or damage their property |
Your business income and key expenses if you can’t operate after a covered property loss |
Who gets paid
|
Third parties (customers, landlords, or venues), plus your legal defense |
You (the business), to replace lost net income and pay ongoing bills |
Typical trigger
|
Accidental bodily injury, property damage, or advertising injury to a third party because of your business |
Damage to your property (for example, a fire or tornado), forcing a temporary shutdown |
Can pay for |
Medical bills, repair or replacement costs, settlements, judgments, and attorney fees |
Lost income, continuing expenses (rent, utilities, loans), and often payroll; may cover costs to expedite re-opening |
Common example
|
Customer trips over a cable at a pop-up, breaks an arm, and wants you to pay their medical expenses |
Kitchen fire closes your café for a month; business interruption insurance can cover lost sales and payroll |
Where it lives |
Commercial General Liability policy or as part of a Business Owners Policy (BOP) |
Commercial Property or Business Owners Policy under “Business Income/Extra Expense” |
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